Computer and smartphone
5 December 2018

European GAFA tax: a solid basis for an agreement by all 27 Member States

At a meeting of Finance Ministers in Brussels on 4 December 2018, France reached an agreement with Germany on the proposed European tax on the digital giants (Google, Apple, Facebook and Amazon, collectively known as GAFA). The tax would come into effect in 2021 and would be levied on turnover at a rate of 3%, on a lower tax base restricted to revenue from online advertising.

After months of negotiations, there is now a Franco-German agreement on taxing digital giants: the companies will pay a 3% tax on their turnovers from online advertising activities from 1st January 2021 at the latest (or earlier, if, in the meantime, we are able to conclude the international negotiations currently taking place on this subject, particularly at the OECD).

This proposal provides a solid basis for an agreement to be reached by all 27 Member States by March 2019. For now, Ireland, Sweden, Denmark and Finland are not yet behind the project, but the agreement between France and Germany should move negotiations forward.

Once the agreement by all 27 Member States has been signed, Europe will be the first major world market to tax the digital giants.

Compromises have been made in reaching this agreement, since Bruno Le Maire would "prefer to revise our goals in order to achieve tangible results, rather than find ourselves at an impasse."

States who wish to do so will be able to impose a heavier rate of tax at national level. France will be among them.


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